- A lack of unique offerings and declining funding may hamper the U.K.’s AI ambitions.
- U.S. tech startups are receiving four times as much funding as British firms.
- The U.K. is looking to boost its AI standing on the world stage.
As Prime Minister Sir Keir Starmer looks to position the U.K.’s artificial intelligence (AI) sector as a key pillar for economic growth, concerns surrounding its focus and level of funding are casting doubt on the country’s ambitions.
Investment in British tech startups has dropped to its lowest level since before the pandemic while funding in Silicon Valley continues to surge.
This decline follows multiple warnings from industry leaders that the U.K. risks falling behind in the global AI race.
AI Firms Lack Focus on Public Good
A report from the Institute for Public Policy Research (IPPR) found that the majority of U.K. AI firms are not focused on solving specific problems or dedicated to helping the public good, despite many being funded by public money.
The IPPR claimed that 85% of firms surveyed were generic AI offerings with no goal of helping with the country’s challenges.
This has raised questions about whether public money is being used effectively.
“The government has said it wants to ‘shape the AI revolution,’ but currently, much of AI innovation is generic and not focused on solving hard problems,” IPPR AI head Carsten Jung said.
“Too many companies are focused on generic process improvements rather than coming up with new, better products,” he added. “[…] This quantity over quality, profit over purpose, speed over substance, approach is a huge missed opportunity.”
U.S. Startups Outpace U.K.
This coincides with reports that U.K. startups fail to entice new investment over their U.S. counterparts.
Dealroom figures, cited by the Financial Times, showed tech startups in the U.K. raised £16.2 billion in 2024, compared to U.S. firms receiving over £65 billion.
In 2024, 57% of global venture capital went to American startups, while the U.K received just 4.8% of global funding over the same period.
The funding gap has raised concerns about the viability of Britain’s ambitions to become a global leader in AI, an incredibly money-intensive industry.
Leading British-founded AI firms, including Google’s DeepMind, have previously been snapped up by international investors.
Barney Hussey-Yeo, founder of AI startup Cleo, told the Financial Times he was planning to move his business out of the U.K.
The founder claimed the U.S. had a better growth mindset and its draw was getting “stronger and stronger every year.”
U.K. AI Strategy
In September 2024, Debbie Weinstein, vice president and managing director of Google UK & Ireland, warned the U.K. would need a comprehensive AI opportunity agenda to benefit from its economic potential.
Amanda Brock, CEO of OpenUK, told CCN in an interview that Britain should align with America’s AI stance if it wanted to see growth.
“What we know is that alignment with the U.S.’s AI lead will be needed to be impactful, and that is likely to be, at best, light touch and undoubtedly open,” Brock said.
In January 2025, the government unveiled the AI Opportunities Action Plan, a comprehensive 50-point strategy designed to harness AI’s transformative potential.
Key initiatives include establishing AI Growth Zones to expedite infrastructure development, significantly increasing public sector computing capacity, and creating a National Data Library to facilitate AI research.
The plan aims to twentyfold the country’s computing capacity in the public sector by the decade’s end.
It remains to be seen if the plan will be enough to supercharge the investment needed to compete with the U.S.
